Technocash ‘distressed’ by money laundering link

Technocash managing director Paul Monsted said despite rigorous checks on clients it was “very difficult” for financial institutions to be certain about the purpose of financial transactions.
Photo: Dominic Lorrimer

The head of the Australian cash exchange business, Technocash, says it is “incredibly distressing" to be linked to a $US6 billion global money laundering scheme and that he has been helping authorities to identify suspicious transactions.

Technocash managing director Paul Monsted told AFR Weekend he had built a legitimate online foreign exchange platform over the past 13 years, before United States court documents this week named Technocash and
Westpac
as conduits in the global criminal money merry-go-round. “We’re a very small link in the chain and we supply information as requested," he said, adding that he employed a full-time compliance officer.

“Technocash has assisted the government authorities to track where the money has gone and to identify other players who were involved."

He admitted that despite rigorous checks on clients, such as passport and residency, it was “very difficult" for financial institutions to be certain about the purpose of financial transactions.

“The Australian regime is primarily a monitory and reporting regime," It’s up to the authorities to check what it is used for and they choose what to do," he said. It is understood Australia’s anti-money laundering agency, AUSTRAC, is working with US counterparts on the matter.

Liberty processed more than 12 million financial transactions annually, worth more than $US1.4 billion. Shell companies around the world, including in Australia, helped conduct and conceal the transfers.

The US Attorney has demanded that billions of dollars derived from the criminal conduct, including up to $US36.9 million held in three Westpac accounts in the name of Technocash, be forfeited. It is understood the funds belonged to Technocash clients, most likely from overseas.

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Separately, it has emerged that Technocash was previously depositing funds with ANZ Banking Group and Commonwealth Bank of Australia. Both banks ended the relationship a few years ago after identifying possible risks, banking sources said.

Mr Monsted said he was given no reason by CBA for shutting down the account. It is understood he appealed the decision to the Financial Ombudsman Service and Australian Competition and Consumer Commission but was unsuccessful in his pursuit of the bank.

The US court indictment said Liberty and its clients, who had fictitious and anonymous identities, used pre-approved third-party “exchangers" as intermediaries to deposit and withdrawal funds.

Sydney-based Technocash operates a digital payments system that transacts up to $150 million a year in business-to-business payments over international borders.

“Liberty Reserve is not a client of ours, but some of our clients dealt with Liberty," Mr Monsted said. He said the anti-money laundering law prevented him from commenting specifically on the case because he risked up to two years jail if he spoke publicly on investigations.

He declined to comment on where he first became aware there was a problem.

Australia Post may be implicated. Technocash partners with Australia Post’s PostBillPay so customers can deposit cash into their Technocash accounts. “Given that this matter is currently the subject of investigation by law enforcement, we are unable to provide further comment," an Australia Post spokeswoman said.

Technocash received $94,000 from the federal government’s AusIndustry to commercialise an electronic currency in 2000 and won an award for creating the first online non-credit payment system.

A spokeswoman for the Department of Industry and Innovation said Technocash met the compliance requirements at the time. “The grant was administered in accordance with the program requirements and the company fully acquitted the funds provided," she said.

Technocash is licensed by the Australian Securities and Investments Commission through an Australian Financial Services Licence.